Corporate Travel Management nearly doubles underlying pre-tax earnings

The record result coincides with the release of a new strategy to double profits over the next five years, as MATT LENNON analyses.
Corporate Travel Management Managing Director, Jamie Pherous.

Corporate Travel Management has nearly doubled its underlying pre-tax earnings in a record first-half of the 2023/24 financial year, closing with an EBITDA of $100.7 million – up 96% from $51.3 million in the corresponding period last year.

The company is aiming higher still, according to its first-half profit guidance just released, with a new five-year strategy to organically double profits by FY29 irrespective of any acquisitions accrued over the same time period.

Key to this objective are targets to chalk up new client wins totalling $1 billion in FY25, rising to $1.6 billion by FY29 – an annual rise of around 3%.

Total revenue for the six-month period closed at $363.7 million, up 25% year-on-year, with a debt-free balance sheet leading to an overall cash balance in the bank of $131.3 million.

“The underlying business is performing well, and we are executing on the things we can control as demonstrated by continued market share gains and our ability to successfully convert revenue into profit growth,” said Corporate Travel Management Managing Director, Jamie Pherous.

CTM said it estimates the corporate travel market’s post-COVID recovery to now be complete at 75% of pre-pandemic spend, with average annual gains of 3% in client activity expected.

Based on this market recovery, CTM said it is anticipating “large-scale industry consolidation”, with many targets burdened with debt and likely open to discussion on how to better manage travel requirements, which it said it is “actively pursuing”.

Broken down by region, CTM reported its best half-year in Australia in terms of new client wins since the pandemic on the back of customer feedback complimenting its value proposition against its peers.

Performance saw a 1% revenue gain, with CTM citing additional costs associated with the rollout out new systems to support its Whole of Australian Government account, which began this month. The company has started 2024 strongly though, with revenue for Jan up 11% on the same month last year.

Other ANZ regional highlights included a strong performance by its new Sleep Space hotel search engine, which CTM said provides expanded hotel choice, increases attachment up-take and enhances supplier engagement.

Plans are now in place to expand Sleep Space across the ANZ region before rolling out the program globally over two years.

These set-up initiatives are expected to see the region return to a much stronger financial performance when full year results are released in Aug.

Elsewhere in the world, Europe was the clear leader pushing overall EBITDA, with revenue up a massive 118% for the half-year and underlying EBITDA up 271%.

This was followed by Asia, which also posted record results of a 63% jump in revenue and 168% spike in underlying EBITDA, despite Greater China activity being only 50% recovered, which CTM said is slower than forecast.

Corporate Travel Management is also continuing to grow its head count, having recently announced James Spence as its new Global Chief Financial Officer, who will start with the company in May following a six-month recruitment process.

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